Green Power Rally Fizzles, Leaving Lisbon Market Flat and Expats Watching

A late burst of optimism in Lisbon’s renewables heavyweights was almost enough to wipe out a lacklustre morning on the PSI, but not quite. By the closing bell the benchmark was still fractionally lower, mirroring the uneasy mood that has coursed through European trading rooms since the European Central Bank chose to pause its rate-cutting cycle. For foreign residents who keep a portion of their savings in Portuguese shares, Friday’s session offered a neat snapshot of the cross-currents currently shaping local markets: energy is humming, retail and banking are hesitating, and politics in both Brussels and Lisbon is never far from traders’ minds.

Why green power could not single-handedly rescue the index

EDP Renováveis, the wind-and-solar arm of the EDP group, inched 0.10 % higher to €10.23 as investors looked ahead to the company’s second-quarter results, due after market close. The uptick extended a 5.7 % gain for Portugal’s energy cohort over the past week, fuelled by cheaper oil (Brent has drifted below $70 a barrel) and a fresh €41 M boost to the Azorean SOLENERGE rooftop-solar programme. Yet even with those tailwinds the sector’s weight inside the PSI is no longer large enough to offset weakness elsewhere: REN slipped after unveiling a 35 % jump in profit that, paradoxically, sparked doubts about one-off tax perks; Galp was flat despite the softer crude price; and smaller grid and biomass names hardly budged.

Banks and shops felt the pinch of lingering inflation

While energy names flirted with the green, shares tied to consumer wallets were resolutely red. Banco Comercial Português (BCP) – a darling of international investors this year thanks to a 49 % rally in the first half – surrendered a portion of those winnings as traders digested the ECB’s decision to keep its deposit rate at 2 %. The central bank’s wait-and-see stance chills hopes for cheaper funding costs and leaves Portuguese mortgage holders, many of them foreigners, paying higher instalments for longer. In retail, Jerónimo Martins and Ibersol lagged on fears that stubbornly 2 %-plus euro-area inflation and looming US-EU tariff skirmishes could erode discretionary spending just as the summer tourist season peaks.

A mixed continental backdrop offered little help

Elsewhere in Europe the day produced a patchwork of modest losses and gains. Frankfurt fell 0.71 %, Paris 0.46 %, while Madrid eked out a 0.47 % rise – a divergence that analysts blamed on contrasting sector mixes rather than any single macro shock. Falling oil prices were broadly supportive, but geopolitical noise – from Washington’s tariff threats to talk of a confidence vote in Portugal’s parliament – kept many portfolio managers on the sidelines. Against that backdrop Lisbon’s 0.8 % slip to 7 675 points felt almost tranquil, helped by the memory of Thursday’s BCP-led advance.

What the coming week holds for expat investors

Seasoned brokers in Chiado expect news flow to intensify. Inside Portugal, the first batch of half-year earnings from Altri, Navigator and Sonae will test the narrative that local corporates can keep pace with the PSI’s stellar 22 % year-to-date rise. Abroad, Wednesday’s Federal Reserve meeting and Brazil’s Copom decision could jolt sentiment in everything from Galp’s refining margins to Portuguese banks’ Latin American loan books. Add the possibility of a snap election in Lisbon should a moção de confiança materialise, and the recipe for volatility is clear.

Context: a record first half still colours the bigger picture

Even after Friday’s wobble Lisbon remains one of Europe’s outperformers in 2025. The PSI’s first-half leap was the largest since 2007, powered by a 43 % jump in CTT and BCP’s near-50 % surge. The laggards are concentrated in pulp and renewables, where Altri and Navigator have struggled with weaker paper prices, and in EDP Renováveis, whose global roll-out schedule was briefly knocked off course by US permitting delays earlier in the year. For long-term investors that backdrop matters more than any single session’s colour: Portugal still offers robust dividends, a stable currency and – for those holding a residence permit – favourable tax treatment on foreign-sourced income.

Practical notes for newcomers to Portuguese equities

Non-resident account opening at local brokers typically requires a NIF (tax number) and proof of EU or UK address; processing times can stretch beyond two weeks during holiday season. Trading hours run 08:00–16:30 Lisbon time, but liquidity in mid-caps often vanishes after lunch, so price swings can look dramatic on thin volume. Most blue chips now report in euros and IFRS, easing comparison with other euro-zone holdings. Finally, remember that the PSI is a total-return index: dividends are reinvested in the benchmark, so the index chart you see already captures those juicy Galp and REN payouts – a nuance many first-timers overlook when benchmarking their personal portfolios.